19th Sep 2006 16:37
Emblaze Ltd19 September 2006 Emblaze Ltd Orca Interactive Ltd Interim Results for the six months ended 30 June 2006 Orca's Interim Results are marginal and have no effect on the overall results ofthe Emblaze Group, which are ahead of market expectations. Ra'anana, Israel, 19 September 2006 - Emblaze Ltd ("Emblaze" or "the Company")(LSE: BLZ) announces that its Group company, Orca Interactive Ltd ("Orca"), aglobal leader in the IPTV middleware market, has issued its results for the sixmonths ended 30 June 2006. Orca's Interim Results are marginal and have no effect on the overall results ofthe Emblaze Group, which are ahead of market expectations. Financial Performance: •Revenues of $914,000 (H1 2005: $3.0m) •Results impacted by current market consolidation and contract delays •Gross profit margin of 81% (H1 2005: 84%) •Net loss of $3.4m (H1 2005: $1.3m) •$0.1 loss per share (H1 2005: $0.04 loss per share) •Strong net cash position with $18.7m at period end €3 year order book increased to $6.7m, from $5.8m at year end Operational Performance: •Deals signed with Jazztel in Spain, NewNet Telecoms in Georgia and a major European telecoms service provider •Further progress with product development during H1 •Orca's Interactive Alliance gaining momentum •Strong pipeline of deals Haggai Barel, Chief Executive Officer of Orca, said: "Our H1 revenue performance has been very disappointing owing to industryconsolidation and delayed purchasing decisions in the first half of the year.For these reasons it is also extremely difficult to provide guidance for thefull year. On the one hand our order book and pipeline are both stronger thanever before. On the other, our experience of the last twelve months has taughtus that the timing of the recognition of revenues cannot be safely predicted. "Even so, we continue to see an increasing number of telecoms and mediacompanies preparing to deploy IPTV services and we remain confident that ourproduct and market position will allow us to play an important role in the IPTVmarket over the coming years." Enquiries: EmblazeDoron Cohen +972 9 7699831/339 Note to Editors: About Emblaze Emblaze Ltd is a group of companies sharing a common mission to provide telecomoperators with technologies, products and solutions for next generationservices: Emblaze Mobile, a new breed in handsets design and manufacturing;Emblaze VCON, is a leading provider of wireless video communicationstechnologies and conferencing solutions for operators and enterprise marketsover IP networks; Orca Interactive (LSE: ORCA), provider of InteractiveTelevision IPTV middleware for Video On Demand (VOD) and broadcast services,aimed at Telecom, cable and xDSL operators; Emblaze SmartContent, developer ofhighly advanced technology for Content-Push over wireless and IP networks tomobile devices and personal computers; emoze, a free global Push Email servicefor mobile devices that will push send your Emails and PIM data to you anywhereand to any device and Visual Defence (LSE: VDI), a provider of wireless and IPvideo solutions for military and homeland security markets. Emblaze Group is traded on the London Stock Exchange (LSE: BLZ) since 1996 andhas offices in the United States, Canada, United Kingdom, China, Korea andIsrael. www.Emblaze.com About Orca Interactive Orca Interactive (LSE-ORCA) is a leading provider of IPTV middleware andapplications for broadband network operators and service providers. Orca enablestriple-play providers to deliver a full array of attractive video-over-IPservices that generate new revenue streams and strengthen customer loyalty.Leveraging a flexible telco-grade middleware platform, Orca empowers operatorsto deliver broadcast TV, video on demand (VOD), personal video recording (PVR),home media and other compelling interactive services. Orca's SI-enabledsolutions are designed for easy outsourcing of integration services by anoperator's preferred systems integrator. Orca has formed strategic partnershipswith leading players across the IPTV value chain to ensure best-of-breedsolutions with low total cost of ownership. For more information, please visitwww.orcainteractive.com. Chief Executive's Review Overview When we announced our results for the year ended 31 December 2005 in March 2006,we explained that, owing to the early stage of the IPTV market, our futurerevenue performance would be very difficult to predict. This remains the casetoday. We also highlighted that revenues in 2006 were likely to besignificantly second half weighted. Even so, our revenue performance in thefirst half of 2006 has been disappointing and a number of factors havecontributed to this performance. Firstly, we had expected to book additional revenues from one of our majorpartners, Lucent, which has been actively involved in pitching for IPTVmandates. However, owing to its current merger discussions with Alcatel, allpurchase decisions relating to IPTV have been put on hold. Secondly, the firsthalf of 2006 has seen a period of significant consolidation in the telecomsindustry. As a result, a number of purchasing decisions at prospectivecustomers, which we had expected to be made in the first half, have beenpostponed pending clarity on the outcome of these M&A discussions. Finally, wehad also expected to record revenues from the deal we struck with a franchise ofa leading media company, announced in December last year. These revenues werenot forthcoming in the first six months of 2006 owing to delays in the decisionmaking process at that leading media company. These delays have meant that itis not yet clear how much of the revenues we will be able to recognize in thesecond half. Financial performance Revenues in the first half of the year were $0.9m, compared to $3.0m in thefirst half of 2005. Gross margins were broadly stable at 81% (H1 2005: 84%). Sales and marketing expenditure increased to $2.2m compared to $2m in H1 2005,as we continued to invest in establishing and building relationships with globalsystem integrators and network access vendors. Research and developmentexpenditure increased to $1.6m (H1 2005: $1.3m). Our operating loss was $3.85m (H1 2005: $1.65m). The net loss increased from$1.3m to $3.4m resulting in a net loss per share of $0.1 (H1 2005: $0.04 lossper share). At 30 June 2006, the Company had cash balances of $18.7m. Operating cashoutflow during the period was $2.65 million (H1 2005: $2.9 million). Product development The Company continues to invest in product development in order to maintain itstechnology's market leading position. Orca recently introduced its Product Catalog at the IBC 2006 Conference inAmsterdam. As part of Orca's Service Delivery Platform (SDP) architecture, theProduct Catalog is an enhanced business management system that extends supportfor flexible business models. It is designed to help IPTV operators support newtypes of pricing methods for services and innovative bundles, driving industrygrowth through enhanced revenue generation and customer loyalty. Orca's new Interactive Alliance IPTV partner program is gaining momentum withthe addition of eight new companies. This underscores the necessity for tested,open and interoperable solutions and new partners have joined the InteractiveAlliance in the technology, application, SUI and integration tracks. Customers and Partners During the first half of the year, Orca announced that its RiGHTv software hadbeen commercially launched with Spanish operator Jazztel. Working alongsideIndra, a Spanish systems integrator, Orca's solution was aimed at helpingJazztel penetrate the residential broadband market. The IPTV service implementedat the end of 2005 initially offered live television over IP using MPEG-4, andwill include other services in 2006. Orca also announced an agreement with a Global Next Generation Network (NGN)equipment vendor for IPTV deployment by a large European telecommunicationsservice provider. The deal consists of an initial purchase of 50,000 OrcaRiGHTvTM middleware licenses and professional services for a triple play serviceof IPTV, Video-overIP and broadband Internet access being built by a largeEuropean telecommunications service provider. The IPTV service is expected tobe launched in the second half of 2006 and that the agreement will be extendedto eventually include up to 400,000 end-user middleware licenses. In April, Orca announced that it was working with systems integrator TelradNetworks to provide ten large urban areas of the country of Georgia with an IP/MPLS-based voice, data and video networking system for Georgia's second largesttelecom operator, NewNet Telecommunications ("NewNet"). The new network has beendesigned to meet NewNet's growth and capacity requirements for the next 10years. Outlook Accurately forecasting our future revenues remains a very challenging task. Wehave a strong pipeline of contract prospects, but the timing of decisions onthese contracts is very difficult to predict given the many changes currentlyoccurring in our industry. The difficulty in predicting our revenues is furthercompounded by the fact that we are currently reliant on new customer wins tosupport revenue growth and the contract discussions we are involved in aremostly large contracts, which amount to a significant proportion of overallrevenue expectations. For these reasons it is extremely difficult to provide guidance for the fullyear. On the one hand our order book and pipeline are both stronger than everbefore. On the other, our experience of the last twelve months has taught usthat the timing of the recognition of revenues cannot be safely predicted.However, it now appears extremely unlikely that we will be able to achieverevenue expectations for the full year to 2006, but we continue to believe thatthe significant majority of full year revenues will be recognized in the secondhalf. Even so, we continue to see an increasing number of telecoms and media companiespreparing to deploy IPTV services. Furthermore we continue to receive positivefeedback from partners and customers about our RiGHTv products and we remainconfident that our product and market position will allow us to play animportant role in the IPTV market over the coming years. Haggai BarelChief Executive Officer 19 September 2006 BALANCE SHEETS U.S. dollars in thousands, except share and per share data 31 December 30 June 2005 2006 --------- --------- Unaudited ---------ASSETS CURRENT ASSETS: Cash and cash equivalents $961 $1,502 Short term available-for-sale-marketable securities 6,395 5,887 Trade receivables 1,568 645 Other accounts receivable and prepaid expenses 511 625 Inventory - 181 --------- --------- Total current assets 9,435 8,840---------------------- --------- --------- NON-CURRENT ASSETS: Long-term available-for-sale marketable securities 13,938 11,346 Severance pay funds 578 694 Property and equipment, net 488 472 --------- --------- Total non-current assets 15,004 12,512-------------------------- --------- --------- Total assets $24,439 $21,352-------------- ========= ========= LIABILITIES AND EQUITY CURRENT LIABILITIES: Trade payables $480 $533 Deferred revenues 599 675 Employee and payroll accruals 1,155 1,196 Accrued expenses and other liabilities 1,799 1,289 Parent company 336 710 --------- --------- Total current liabilities 4,369 4,403--------------------------- --------- --------- Severance pay liability 844 1,049 --------- --------- Total liabilities 5,213 5,452------------------- --------- --------- EQUITY: Share capital: Ordinary shares of NIS 0.01 par value: Authorized: 55,000,000 shares at 31 December 2005 and 30 June 2006;Issued and outstanding: 35,477,299 and 35,538,299 shares at31 December 2005 and 30 June 2006, respectively 81 82 Additional paid-in capital 45,755 45,867 Net unrealized loss reserve (163) (222) Accumulated deficit (26,447) (29,827) --------- --------- Total equity 19,226 15,900-------------- --------- --------- $24,439 $21,352 ========= ========= The accompanying notes are an integral part of the financial statements. STATEMENTS OF INCOME U.S. dollars in thousands, except share and per share data ---------------- Year ended Six months ended 31 December, 30 June, ---------------- 2005 2005 2006 ------------ -------- -------- Unaudited ------------- Revenues $5,325 $3,022 $914 Cost of revenues 643 477 172 ------------ -------- -------- Gross profit 4,682 2,545 742 ------------ -------- -------- Operating expenses: Research and development, net 2,585 1,286 1,632 Sales and marketing 4,430 2,012 2,163 General and administrative 1,979 901 799 ------------ -------- -------- Total operating expenses 8,994 4,199 4,594--------------------------- ------------ -------- -------- Operating loss 4,312 1,654 3,852 Financial income, net 794 351 472 ------------ -------- -------- Net loss $3,518 $1,303 $3,380 ============ ======== ======== Basic and diluted net loss per $0.10 $0.04 $0.10share ============ ======== ======== Weighted average number of sharesused in computing basic and diluted net loss per share 35,412,746 35,351,187 35,430,294 ========== ======== ======== The accompanying notes are an integral part of the financial statements. STATEMENTS OF CHANGES IN EQUITY U.S. dollars in thousands, except share data Total recog- Ordinary Net nized shares Additional unrealized Accumu- income and ------------- paid-in loss lated expenses Shares Amount capital reserve deficit Total -------- ------- -------- -------- --------- ------------- Balance as of 1 35,323,799 $81 $45,425 $- (22,929) 22,577 $-January 2005 Issuance ofshares uponexercise ofemployees' share 153,500 *)- 42 - - 42 -options, netUnrealizedlosses onavailable-for-sale marketable - - - (163) - (163) (163)securitiesShare-based - - 288 - - 288 -compensationNet loss - - - - (3,518) (3,518)(3,518) ------------------------------------------------------ Balance as of 31 35,477,299 81 45,755 (163) (26,447) 19,226 (3,681)December 2005 ======== Issuance of shares uponexercise ofemployees' share 61,000 1 16 - - 17 -options, netUnrealizedlosses onavailable-for-sale marketable - - - (59) - (59) (59)securitiesShare-based - - 96 - - 96 -compensationNet loss - - - - (3,380)(3,380) (3,380) -------------------------------------------------------- Balance as of 30June 2006(unaudited) 35,538,299 $82 $45,867 $(222) $(29,827) $15,900 $(3,439) ======================================================== *) Represents an amount lower than $ 1. The accompanying notes are an integral part of the financial statements. STATEMENTS OF CASH FLOWS U.S. dollars in thousands -------------- Year ended Six months ended 31 December 30 June 2005 2005 2006 Unaudited Cash flows from operating activities:---------------------------------------Net loss $(3,518) $(1,303) $(3,380) Adjustments to reconcile net loss to net cash used in operating activities:Depreciation 295 143 148 Share-based compensation 288 138 96 Amortization of marketable securities premiums 92 32 41 Decrease (increase) in trade receivables, otheraccounts receivables andprepaid expenses (623) (2,507) 809 Increase (decrease) in trade payables, employeesand payroll accruals andaccrued expenses and other liabilities 431 348 (350)Increase in inventory - - (181)Increase in deferred revenues 584 215 76Increase in accrued severance pay, net 24 35 89 -------- ------ -------- Net cash used in operating activities (2,427) (2,899) (2,652) -------- ------ -------- Cash flows from investing activities:--------------------------------------- Investment in long-term available-for-sale (14,104) (11,106) -marketable securities Proceeds from maturity of short-term 8,066 6,438 3,000available-for-sale marketable securitiesPurchase of property and equipment (289) (137) (132) -------- ------ -------- Net cash provided by (used in) investing (6,327) (4,805) 2,868activities -------- ------ -------- Cash flows from financing activities:--------------------------------------- Refundable grants received from the Chief Scientist 292 - -OfficeRoyalties paid to Chief Scientist Office - - (66) Parent Company, net (539) (441) 374 Issuance of shares upon exercise of employees' 42 24 17share options, netIssuance expenses (109) (109) - -------- ------ -------- Net cash provided by (used in) financing (314) (526) 325activities -------- ------ -------- Increase (decrease) in cash and cash equivalents (9,068) (8,230) 541 Cash and cash equivalents at the beginning of the 10,029 10,029 961period -------- ------ -------- Cash and cash equivalents at the end of the $961 $1,799 $1,502period ======== ====== ======== Supplemental disclosure of cash flows activities:--------------------------------------------------- Cash received during the period for: Interest $656 $261 $430 ======== ====== ======== The accompanying notes are an integral part of the financial statements. NOTE 1:- GENERAL a. Orca Interactive Ltd. ("the Company") was incorporated in Israel andcommenced operations in August 1995. The Company is headquartered in Ra'anana,Israel. In April 2000, the Company was acquired by Emblaze Ltd. ("the ParentCompany"), a company organized under the laws of the State of Israel and tradedon the London Stock Exchange. In October 2004, the Company completed an InitialPublic Offering ("IPO") on the London Stock Exchanges Alternative InvestmentMarket ("AIM"). The Company issued 14,141,414 Ordinary shares to institutionaland other investors at a price of $1.8 per share, raising amount ofapproximately $ 25,200 before issuance expenses. b. The Company develops and licenses software for the provision oftelevision and other entertainment services over IP network infrastructures. NOTE 2:- BASIS OF PREPARATION AND ACCOUNTING POLICIES Basis of preparation The interim condensed financial statements do not include all the informationand disclosures required in the annual financial statements, and should be readin conjunction with the Company's annual financial statements as at 31 December2005. The accounting policies adopted in the preparation of the interim condensedfinancial statements are consistent with those followed in the preparation ofthe Company's annual financial statements for the year ended 31 December 2005,except for the adoption of the following amendments mandatory for annual periodsbeginning on or after 1 January 2006: * IAS 39 Financial Instruments: Recognition and Measurement("IAS 39") - Amendment for financial guarantee contracts; * IAS 39 - Amendment for hedges of forecast intragroup transactions; * IAS 39 - Amendment for the fair value option. The adoption of these amendments did not affect the Company results ofoperations or financial position. Inventory balance consists of costs of finished products and is calculated usingthe "first-in, first-out" method. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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